Retailers threaten to hike fuel prices by Rs 8 per litre
New Delhi   18-Apr-2012

Three large government-run fuel retailers like IndianOil, HPCL and BPCL have threatened to hike petrol prices by Rs 8.04 per litre if government fails to compensate them for selling the auto fuel below market cost.

They have urged the government to bring back petrol under regulated regime or provide 100 per cent cash compensation.

It has also proposed an alternative saying reduce excise duty on petrol from Rs 14.78 per litre by an amount equivalent to the under-recoveries. Also, centre may advise states to reduce sales tax, which vary from 15 to 33 per cent. This translates from Rs 10.30 per litre to Rs 18.74 per litre.

IndianOil said that current international petrol prices of petrol stands at $ 132.45 per barrel. However, the market price is aligned only till $ 109.03 per barrel at which IndianOil and other retailers are selling, excluding local taxes.

Petrol prices were to be revised by Rs 1.89 on January 1; Rs 4.08 on January 16; Rs 3.13 on February 1; Rs 3.47 on February 16; Rs 5.09 on March 1; Rs 6.43 on March 16 and Rs 7.66 on April 1, IndianOil said in a statement.

Currently, every litre of petrol in New Delhi cost Rs 65.64, whereas it should have been Rs 73.04 for every litre excluding local levies. Government in June 2010 deregulated petrol. However, companies are ‘informally’ asked not to increase auto fuel price considering it politically sensitive.

IndianOil’s inability to match petrol price with global price during December 16 2011 to March 31, 2012 has resulted into loss of Rs 1,036 crore. The losses stand at Rs 2,287 crore if under-recoveries of BPCL and HPCL are taken into count. The under-recoveries suffered by IndianOil during 2011-12 on selling petrol is Rs 2,236 crore, while it is Rs 4,859 crore for all three companies.

For regulated products, three state-run oil marketing companies IndianOil, BPCL and HPCL sells every litre of diesel at Rs 14.29 less than market cost. At the same time, every litre of kerosene is sold at a discount of Rs 31.04 and every domestic cooking gas cylinder is subsidised by Rs 570.50.